China's Oil Demand Expected to Decline 8.9% This Year... Third Consecutive Year of Decline

[Financial News] China's oil demand this year is expected to fall by 8.9% compared to the previous year, marking the third consecutive year of decline.
In a recent report, the Economic and Technological Research Institute under China Petroleum & Chemical Corporation (Sinopec) projected that China's average daily oil demand would decrease by 600,000 barrels this year, down 8.9% from the previous year.
Although upward pressure on international oil prices has increased due to severe disruptions in crude oil supplies through the Strait of Hormuz caused by the war with Iran, reduced demand from China, the world's largest oil importer, is acting as a major factor restraining the price increase.
By fuel type, the decline in demand for gasoline and diesel is expected to be pronounced.
Researchers predicted that China's gasoline consumption this year would fall by 8.7% from the previous year to 149 million tons, while diesel consumption would drop by 11.4% to 164 million tons. On the other hand, aviation fuel demand was expected to increase by 1.3% from the previous year to 41.55 million tons.
Analysis suggests that the rapid adoption of new energy vehicles, including electric cars, and the expansion of charging infrastructure are contributing to the decline in gasoline consumption.
According to the National Energy Administration of China, as of the end of June, China's electric vehicle charging infrastructure stood at 23,057,000, an increase of 43.2% from a year ago.
China National Petroleum Corporation (CNPC), another Chinese state-owned oil company, also projected last June that China's oil consumption this year would fall by 4.9% from the previous year to 753 million tons due to the impact of the transition to new energy and high oil prices.
The researchers also predicted that sluggish demand in the petrochemical sector would continue.
Researchers assessed that while profits in China's chemical industry surged by more than 50% year-on-year from January to July this year, actual demand remains sluggish due to factors such as high costs and inventory burdens.
China's crude oil throughput this year is projected to be 697 million tons. This represents a 5.4% decrease from the previous year, and the refinery utilization rate is expected to be 73.2%.
Along with this, it was predicted that the restructuring of excess capacity in China's oil refining industry would begin in earnest.
The explanation is that while China's refining capacity is expected to increase to 952 million tons per year, or 19.04 million barrels per day, this year, the elimination of excess refining capacity will accelerate as policy regulations are tightened and oil demand decreases.
In particular, it was predicted that a total annual refining capacity of 80 million to 100 million tons would be withdrawn from the market, centered on small and medium-sized refineries with simple product mixes.
Accordingly, researchers projected that China's annual oil refining capacity would decrease to 900 million to 910 million tons by the end of 2030.
This represents a decrease of up to 5.5% compared to the expected refining capacity of 952 million tons this year.

[email protected] Lee Seok-woo, International Specialist Reporter